Town considering lower sales tax

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SNOWMASS VILLAGE - Does Snowmass Village's 10.4 percent sales tax rate, one of the nation's highest, discourage people from shopping here?

Some residents and merchants have argued that it does, which has prompted the Snowmass Village Town Council to discuss the issue at its next regular meeting on April 8.

Snowmass Village's local sales tax totals 3.5 percent. One percent of the town's retail revenue goes to its general fund, and 2.5 percent is dedicated to its marketing fund, a tax that voters approved in 2003.

Some other ski resorts in Colorado, including Steamboat Springs, Telluride and Vail, have local sales tax rates of 4 percent or higher, according to their websites. But their combined rates fall below 10 percent because of their counties' low tax rates.

Pitkin County's 3.6 percent tax rate helps drive Snowmass' rate over the 10 percent mark. The Town Council can't touch the tax rate of the county and other taxing districts or entities such as the state and Roaring Fork Transportation Authority.

The Town Council's most viable option would be to trim the rate of the marketing tax, said Town Manager Russ Forrest, because the village couldn't afford to operate if it lost the sales tax for the general fund.

Reed Lewis, owner of Daly Bottle Shop, Grain and 81615, said that the 10.4 percent sales tax is daunting to a consumer. Given the choice of paying a different price for the same item, people will choose the better value, he said.

"It's over 10 percent, and that's the threshold at which people can't handle," Lewis said.

The highest combined sales tax rate in the country belongs to Tuba City, Ariz., with 13.725 percent, according to an organization called Tax Foundation. Alabama's Birmingham and Montgomery had the highest rate in major U.S. cities last year, at 10 percent.

Forrest said there are no hard data to show whether the sales tax has had an impact on spending. Some people have pointed out that the cost of a vacation in Snowmass Village remains lower than in many other resorts, he said.

"The experts we've contacted don't think it would make an impact on spending," Forrest said.

Susan Hamley, director of Snowmass Tourism, has said in the past that there might be a time when the marketing tax could be reduced. Hamley is leaving her post at the end of ski season, and there has been talk of restructuring Snowmass Tourism in light of her departure. However, she said this is still not the time to reduce the marketing tax.

"We have to remember that Snowmass was behind competitively when this program was put in place in 2003," Hamley said. "Advertising and (public relations) campaigns, special events, guest services and other tourism-oriented activities needed to be developed and launched, which required funding just to get on a more level playing field."

A dedicated marketing effort led to increases in occupancy and sales tax revenue until the recession hit, Hamley said.

"Internal and external factors, including an improving economy, are helping to return to a healthier performance," she said. "If we truly believe in our aspiration to be the leading multiseason, family-oriented, inclusive mountain resort community, this is not the time to slow down the momentum."

Lewis served on the Marketing, Special Events and Group Sales Board in its infancy and says the department it oversees could operate on a smaller budget. Marketing-fund expenditures totaled $3.6 million last year.

"Snowmass' economy has mirrored the national economy," he said. "I agree we need to spend money, but not ... to the tune of $3 million."

Lewis also thinks lowering the sales tax is a good marketing move in itself.

Forrest said the town staff encourages merchants and residents to participate in the discussion at the meeting, starting at 4 p.m. on April 8. The council probably won't make a decision, but the officials might give the staff some direction on how to proceed.

"We would probably have to look into what the appropriate process" is for making that change, Forrest said.

"It certainly would have significant budgetary implications," he said.